Adam's Fallacy: A Guide to Economic Theology

Duncan K. Foley

"the idea that it is possible to separate an economic sphere
of life, in which the pursuit of self-interest is guided by
objective laws to a socially beneficent outcome, from the rest
of social life, in which the pursuit of self-interest is morally
problematic and has to be weighed against other ends."

In Adam's Fallacy he presents a history of political economy which
both avoids this mistake and critiques its manifestations.

Foley focuses on a few key figures. Chapters on Adam Smith, Thomas
Malthus and David Ricardo, and Karl Marx take up the first two thirds of
Adam's Fallacy. He touches briefly on some of the founders and ideas
of marginalist or neoclassical economics, on Jevons, Menger, and Clark,
on marginal utility and Pareto allocations. And he concludes with Keynes,
Hayek, and the debates between them and their followers, notably over the
assertion of Say's Law that a chronic oversupply of labour is impossible.
A final chapter recapitulates this history from a broader perspective,
in its moral and political context.

This history of political economy is necessarily idiosyncratic in its
choice of material and limited in its scope, but it covers the most
central ideas. (Mathematics is avoided completely, with a few simple
equations and diagrams relegated to an appendix.) The result is a fine
alternative or complement to books such as Robert Heilbroner's The
Worldly Philosophers.

As a critique of claims by economists to truths that transcend ordinary
science and morality, Adam's Fallacy is complicated by its historical
approach. On the one hand, there are forms of modern economic theology
it doesn't tackle at all. On the other hand, it continually runs the
risk of anachronistic criticism, though Foley is careful when testing the
ideas of earlier thinkers against subsequent history, and acknowledges
the existence of

"later versions of Adam's Fallacy, particularly the formulations
of marginalist and neoclassical economics, of which there is no
sign that Smith had the slightest inkling."

It is unlikely to convert ardent adherents of Austrian economics, but
Adam's Fallacy may help newcomers to economics avoid a neoclassical
indoctrination.